Australian shares hit 10-week high

Australian shares jumped to a 10-week high on Friday as investors cheered a larger than expected economic stimulus package from the European Central Bank, which added to growing hopes of a domestic interest rate cut. The death of Saudi king Abdullah encouraged investors to buy energy stocks amid speculation a change of leadership in the pivotal oil-producing nation might lessen a global supply stand-off that has been driving the commodity's spot price down.
The S&P/ASX 200 index rose 81.9 points or 1.5 percent to 5501.8, its highest since November 11, bringing its gains for the week to 4 percent. Australian financial markets will be closed on Monday for the Australia Day holiday. New Zealand's benchmark NZX 50 index rose 28.1 points or 0.5 percent to finish the session at 5675.2.
The death of Saudi king Abdullah encouraged investors to buy energy stocks amid speculation a change of leadership in the pivotal oil-producing nation might lessen a global supply stand-off that has been driving the commodity's spot price down. "The global easing phenomenon continues at an ECB level," said IG Markets institutional dealer Chris Weston, referring to the ECB's launch of a bond-buying drive that will pump hundreds of billions of new money into the sagging euro zone economy.
"We're seeing a situation where money has really no choice but flow into stocks." A surprise interest rate cut in Canada earlier in the week boosted speculation the Reserve Bank of Australia may follow suit, rather than raise rates as previously forecast, if key domestic economic figures disappoint, Weston added. Oil producer Santos led energy stocks higher, gaining 6 percent, while Woodside Petroleum added 2.3 percent and Oil Search rose 2.5 percent. Resources contractor Worley Parsons jumped 5 percent after winning a services contract in Canada. Miners BHP Billiton and Rio Tinto gained 2 percent and 1.4 percent, respectively.
Smaller rival Arrium fell 3 percent after cutting production targets and shutting a mine, while commodities logistics firms Qube Holdings and MACA slumped 3.5 percent and 9 percent because of concerns they will lose business as a result. Among banks, Westpac Banking Corp, Commonwealth Bank of Australia and National Australia Bank all added 1 percent. New Zealand biggest listed company Fletcher Building was up 1.3 percent and telecommunications company Spark was 2.2 percent higher.